Vietnam Food & Beverage industry

Possibilities for food and food production is on the rise in Vietnam. More and more, the Vietnamese people are interested in and willing to pay for healthy and high quality products. The Netherlands has gained a good image over the years in Vietnam. Not only because of tulips and cheese, but also because of trustworthy, high quality and innovative food and food processing.

Food Expo 2018
Beeld: ©EKN
Dutch products present at Food Expo 2018 in Ho Chi Minh city

New trends:

Consumers are more concerned on  health, hygiene and food safety  issues thus tend to spend more on safe, environment friendly and even organic products.

-  Increase in number of nuclear families, single person that makes change in packaging of processed and ready food products.

-  Technologies development make it easier to access and experience new cuisine trend, the availability of online food delivery apps, all support to make the market more vibrant.

Vietnam

30 years of reform has made Vietnam, a country of 94 million population to completely change its economic landscape with high economic growth, improved living standard.

Being one of the fastest growing economies in Asia maintaining about 6-7% annual GDP growth over the past 10 years has allowed Vietnam to join the ranks of the world’s lower middle income economies. GDP per capita is 2400 USD in 2017 and targets to be 10.000 USD by 2035 (upper-middle income).

Vietnam is the leading producer and exporter of a variety of agricultural products including rice, fruits and vegetables, catfish, cashews, coffee, pepper. In the meantime, the country imports large amount of agricultural and food products to meet growing demand for both human and animal consumption. Consumer oriented products: import value in 2017 is 13.9 billion USD of which 70% are from China, India, Thailand, Hongkong and USA. (EU countries account for 5%).

F&B manufacturing market is dominant by small companies (less than 50 employees) – 84%. Food processing has been growing steadily at 7% over the last 5 years. The growth of food consumption is 9.4% and of beverage consumption is 6.7%. Young population, improving incomes, increasingly popular habit of buying processed foods, the abundance of food supplies will probably make Vietnam to come to top 3 in Asia in terms of F&B development.

Small traditional retailers (traditional wet markets and small independent stores) are dominant Vietnam’s food retail sector but modern retail channels are robustly expanding in response to growing consumer demand. Key modern retailers are Vinmart, Aeon Mega Mart, MM Mega Mart, Big C, Co.op Mart, Lotte Mart, Circle K.

Meat industry

Sales volume is about 4.1 million tons:

Pork accounts for the largest portion of 2.64 million tons; followed by poultry (1 million tons); beef and veal (321 thousand tons); lamb and goat (25 thousand tons). Poultry registers the highest growth performance at 7%, followed by lamb & goat, then beef & veal.

Pork accounts for by far the highest volume sales of fresh meat in Vietnam with main supply source from small private businesses farmers. However, the import of meat at lower prices is in increasing trend.

African Swine Fever (ASF) detected in Vietnam early 2019 has damaged tremendously the pork industry in Vietnam which involves 2.4 household farms and about 10.000 industrial farms. 62/63 provinces confirmed the outbreak, culling more than 3 million pigs. (~12% total heads).

Pork processing
Beeld: ©VNA/VNS
Pork processing

Fisheries processing industry

Fisheries processing is one of the keys to economic development in Vietnam with export value of 9 billion USD  (2018) being in the top 4 of biggest export earning sector, after garment, footwear and crude oil.

Fisheries import in 2018 was 1.72 billion USD (20% increase compared with 2017). India is the biggest exporter of fisheries products to Vietnam (20%) , followed by Norway (10.4%), South East Asia (8.8%), China and Japan. Fisheries import are mainly served as raw materials for processing with shrimp and tuna accounting for the majority (34% for shrimp and 20% for tuna).

FAO statistics shows that fisheries products consumption is Vietnam is 31-32kg/capita/ year and is expected to be 44kg/capita/year by 2020. The forecasted increasing domestic demand has made processing companies to pay more attention to domestic market. Furthermore, many companies have invested in processing new products for hi-end markets.

Under a strategy to restructure the aquatic sector by 2020, Vietnam will reduce facilities for semi-processed products while encouraging the application of modern technologies to improve quality. Proportion of instant and high added value products is aimed to increase to 60-70% towards meeting demands of various markets.

Dairy

The sector is valued at 4.1 billion USD and has experienced particularly strong growth in recent years (CAGR at 16.6% over the last 5 years). Key drives for this growth have been increasing urbanization, rising incomes and change in consumer eating habits. Average consumption is now at 26 lit/capita/year, still low compared with that of Thailand or Singapore.

90% of market share remains at 8 leading companies like Vinamilk, Nestle Vietnam, Friesland Campina, Nutifood Binh Duong, Quang Ngai sugar company, IDP

More and more companies are launching organic milk brands as increased demand of products: Vinamilk, TH milk and recently Friesland Campina.

On average for the last 8 years, Vietnam spends more than 800 million USD to import milk products. New Zealand (33% import value), South East Asia and EU (Germany, Netherlands, France, Poland, Spain, Belgium, Denmark) are key exporters. 2017 performance showed an increase import value from USA and Singapore.

Local supply in Vietnam can only meet 30% of raw milk materials for processing, the remaining has to be imported, according to Vinamilk.

In the meantime, Vietnam is exporting dairy products (mainly yogurt and other dairy products) with value at more than 300 million USD in 2017.

Visitng FDOV project Hanam 1
Beeld: ©EKN
DG Sonnema visit to FrieslandCampina FDOV Dairy project

Fruits and vegetables

Horticulture production and processing is considered the most potential subsector of Vietnam agriculture. Export value shows a rapid increase recent years at  32.7% during 2011 – 2016 and 43% in 2017 compared with 2016. Fruits export accounts for 80% and the remaining of 20% is from vegetables. Fruits and vegetables export in 2017 was valued 3.5 billion USD and 3.8 billion USD in 2018 and reached 150 countries in the world.

In the same time, Vietnam imports a large amount of fruits and vegetables, mainly from 12 markets. China used to be the biggest exporting market to Vietnam, but recently Thailand has surpassed them. Thailand and China together account for 65% of import value of fruits and vegetables. Other big and increasing markets are USA, Australia, Korea and India.

Beverages

With a forecasted annual growth rate of 6% to 2020, the beverage industry in Vietnam is amongst the highest growth fast-moving consumer goods industries. Beverage consumption is estimated to reach 81.6 billion litres in 2016 with an outlook to reach 109 billion litres in 2020 according to EVBN report.

Beer sector in Vietnam is considered to have immense opportunities for investment as the country’s consumption is in the top 10 of Asian region, expected to be 42 litre/capita in 2020 despite of humble CAGR of 3.5%. Wine and spirits and nonalcoholic drinks sectors are also forecasted to have an 8%- and 6.1%-CAGR respectively.

Vietnamese consumers are considered to be the most health-conscious in Southeast Asia, calling for manufacturers to start rethinking market offerings which calibrate towards healthier product portfolio such as fruit juices or herbal teas.

Food ingredients

UBM Asia survey estimates Vietnam food industry to grow up to 52% in the next 5 years and such development would lead to the growth of food ingredient sector as well.

Food processors in Vietnam use both locally produced raw materials and imported food ingredients in their operations. Large processor tend to directly import specific ingredients while minor ingredients, additives, flavors or preservatives are usually purchased through importers or distributors.

Market entry

To enter the market, Dutch exporters are recommended to conduct intensive research to understand market demand, local business customs, importing requirements and to identify potential buyers.

Participating in trade shows and trade missions could offer good opportunities to better understanding the market and to engage directly with potential partners.

Some important annual trade shows for consideration are Foodexpo, Food and Hotel, Food Ingredients.

Foodexpo (https://foodexpo.vn/): annually

 is the largest and no.1 international trade show on food industry in Vietnam. 450 companies booths and national pavilions from worldwide were present showcasing their products, technologies and services to thousands of visitors from more than 50 countries and territories.

Being the Partner country of the Foodexpo 2018, Netherlands has many companies presenting their products under the Holland pavilion and meeting potential partners. Companies are thankful the embassy for organizing and arranging such efficient and fruitful meetings for them. The Netherlands has been presented themselves with a Michelin starred chef cooking with Dutch meat, vegetables and cheese. In addition the embassy organized a seminar on how to strengthen Food Safety in Vietnam.

Food and Hotel Vietnam (https://foodnhotelvietnam.com/) every two years (odd year) in HCMC

In the past 10 years, FHV has been bringing the most comprehensive selection of Food & Drinks, Hospitality Equipment & Supplies products from all over the world to Vietnam.

Food and Hotel Hanoi (https://foodnhotelhanoi.com) every two years (even year) in Hanoi

Backed by a solid proven track record of success of Food&HotelVietnam staged in Ho Chi Minh City, Food&HotelHanoi has been launched to offer a direct route for international exporters and suppliers to the Northern Vietnam’s burgeoning food and hospitality industries.

Vietfood & Beverage; Propack Vietnam (http://www.foodexvietnam.com/) both in Hanoi and HCMC

is organized by Vinexad (under Ministry of Industry and Trade) with strong supports of local authorities such as Ministry of Industry and Trade, Ministry of Agriculture and Rural Development, Local and Foreign Associations of Beverages, HoChiMinh City Food Association.

Food Ingredients (https://www.figlobal.com/vietnam/)

Fi Vietnam is the only dedicated food and beverage ingredients exhibition in Vietnam, offering industry professionals a gateway to the thriving ingredients market in Vietnam and neighbouring Cambodia, Laos and Myanmar.

Fi Vietnam is a biennial event and returns in 2020 alongside its co-located Beverage Ingredients and Natural Ingredients pavilions, gathering the entire food and beverage value chain to source ingredients, network with industry professionals and learn about the latest trends and developments in the region.

For further information, please contact the Netherlands Embassy at : han-lnv@minbuza.nl